The Internal Revenue Service (IRS) and the Department of Labor (DOL) recently announced a partnership designed to crack down on worker misclassification -- that is, treating workers as independent contractors when they should be treated as employees. A number of states have joined the enhanced enforcement initiative and others are expected to follow.

The reason? Money. Misclassification costs federal and state tax agencies billions of dollars each year in lost tax revenue.

While worker classification can be somewhat ambiguous in some industries, the IRS has ruled definitively on the household employment industry. Nannies, housekeepers, health aides, personal assistants, estate managers and other domestic workers are all considered employees -- regardless of what they're called in a contract, how much they're paid, or how many hours a week they work.

Misclassifying these employees as independent contractors is considered tax evasion and includes back taxes, penalties and interest. If you've had a household employee and been illegally giving her a Form 1099, now's the time to re-classify her as an employee and give her a Form W-2. If you're worried about the cost or the paperwork, don't be; tax breaks make it much cheaper than you think and our service makes it effortless. For more info, click here to take our brief video tour.